Lab-grown diamonds take sheen off natural gems

There is room for both in business. Customers are opting lesser carat of natural diamonds due to its historical value, whereas higher carat in lab-grown diamonds is preferred in bigger jewellery pieces as it comes at an affordable price -Manav Agarwal,Sainath Jewellers, tells Bizz Buzz

Price Catch:

• Lab-grown diamonds mkt likely to grow at 14.8% over next 10 yrs

• Total market size expected to be $1,192.3 mn by 2033 from $299.9 mn in 2023

• One carat natural diamond costs Rs3.5 lakh to Rs5 lakh

• 1 carat lab-grown diamond costs Rs28k in wholesale, Rs55k in retail market

• However, lab-grown diamonds lack resale value when compared to natural gems

• Post-Covid, exports of lab-grown diamonds shoot up by 150%

Hyderabad: Diamonds are forever...many diamond jewellery businesses cashed on one such tag line until an affordable version (lab-grown) of the expensive ‘forever’ natural diamond grew popular in India. In the past few years, surplus supply of lab-grown diamonds and stabilisation of its price has drawn young Indians, customers as well as jewellery retailers, towards lab-grown diamond as a cost-effective alternative. On customer’s demand, the next-gen of these traditional jewellers in the city have expanded their diamond business by adding lab-grown diamonds.

“From decades, we have been dealing in natural diamonds. As our clients were asking for lab-grown diamonds, we started off by introducing a minimal range in the bridal section. Few clients ask for lab-grown, some are persistent on natural diamonds, while few have returned from lab-grown to natural. It all depends on customers mindset or choice,” Madhav Bung of Anaga, lab-grown diamond jewellery from the house of Brinda Diamonds, told Bizz Buzz.

The central government’s push to amplify manufacturing and supply of lab-grown diamond, so as to put India as a lead exporter on the global map, has given a boost to lab-grown diamond sales in India.

“Overall the market itself has slowed down. Less supply of rough diamonds, inflation, including competition due to lab-grown diamond, have affected sales (in volume) of natural diamonds by 20 to 30 per cent. From past two to three years, lab-grown diamond has garnered traction as it is a new concept then. First time diamond buyers will opt for lab-grown as it is affordable and lets middle class customers own a piece of budget diamond jewellery,” Jigar Chhatriwala of Jodhani Brothers, manufacturer of natural diamonds for the last two decades, said, while expounding reasons for dwindling business of natural diamonds.

According to a report, ‘India lab-grown diamond jewellery market outlook from 2023 to 2033,’ the lab-grown diamond market is valued at $264.5 million in 2022. It is likely to grow at 14.8 per cent CAGR over 10 years. The total market size is set to increase from $299.9 million in 2023 to 1,192.3 million by 2033.

“Post-Covid, exports of lab-grown diamonds have shot up by 150 per cent, and encouraged by this growing demand, the central government is working towards making India as the manufacturing hub for lab-grown diamonds,” Mumbai-based jewellery designer and educator, Hetal Vakil said.

Asked how does pricing of both the diamonds (same carat) vary, Vakil informed that the pricing list for diamonds is displayed on Rapaport every Friday, which is used as a base to establish the price of diamonds sold, and discount offered individually. One carat natural diamond will cost around Rs3.5 lakh to Rs5 lakh. The similar quality one carat in lab-grown will cost around Rs28,000 in wholesale, and around Rs55,000 in the retail market. Though certificates are provided in both the purchases, right now, lab-grown diamond purchase lacks clarity on its buyback value, she pointed out.

Madhav Bung, a second-generation diamond jewellery retailer, ventured into lab-grown diamond business from natural diamond to cater to the demand in bridal jewellery segment. On affordability playing a major role, he said, a lab-grown diamond necklace price starts from Rs4 lakh, choker starts from Rs7 lakh and haaram starts from Rs9 lakh. The same lab-grown jewellery that costs Rs4 lakh will be more than Rs10 lakh when a natural diamond is used.

However, foreseeing an increase in price of lab-grown diamond, Bung said: “The price of lab-grown diamond has already touched its lowest base. Now, I am foreseeing these prices to shoot up by 10 per cent in the next four to five months, on the back of increase in demand, and supply falling short in the Indian market.”

While few retailers in the city have branched out to include lab-grown diamond business, the older generation of jewellers is resisting change. Kailash Charan, owner of Srinath Jewellers, the official jewellers to the Nizams, said: “Hyderabadis value precious gems, pearls and diamonds. We do not find the need to switch as our customers even now prefer natural diamonds. Moreover, I do not think there is any resale value for lab-grown diamonds.”

Natural diamond or lab-grown, none will substitute the other, conclude retailers. Manav Agarwal, Sainath Jewellers, said: “There is room for both in business. Customers are opting lesser carat of natural diamonds due to its historical value, whereas higher carat in lab-grown diamonds is preferred in bigger jewellery pieces as it comes at an affordable price.”